Company Confidential September 28, 2015

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Product Stewardship – A High Stakes Game

Excellent Product Stewardship can Create a Competitive Advantage

Initial Concept Design Research &

Development Manufacture

Storage Distribution Reasonably Foreseeable

Use Recycling Disposal

§  Export Group §  Import Group §  Technical Services §  Quality Control §  QA §  Supply Chain

§  R&D §  Trade Associations §  External Customers §  Professional Groups §  Suppliers §  Plant

§  Finance §  Shipping & Receiving §  Product Managers §  Marketing §  Third-party Certifiers §  Legal

§  Product Distributors §  Regulatory Agencies §  Sales §  Customer Service §  IT

Product Stewardship is the responsible management of the health, safety, environmental and regulatory issues and risks of a product throughout its life-cycle. From initial concept to disposal, reuse or reclamation, Product Stewardship is integrated into all business decisions and involves every employee.

Company Confidential September 28, 2015

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Some Cases Studies

Eight recalls in 2010 Benadryl and Tylenol

warehouse contamination

Tire defect causing rollovers and fiery crashes

e-coli tainted spinach

Unintended acceleration multiple recalls

Gulf of Mexico oil spill catastrophe

Bhopal, India Hawks Nest Tunnel, WV

Company Confidential September 28, 2015

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Toyota – Unintended Acceleration

Excellent Product Stewardship can create a Competitive Advantage

Toyota’s Product Cycle

Product Development Production Distribution Consumer /

Ownership Customer Retention

§  Design, prototype, testing

§  Market research

§  Financial and economic forecasts

§  Vehicle design

§  Systems research

§  Technology development & acquisition

§  Talent development

§  Manufacturing design

§  Plant specification and construction

§  Manufacturing spec’ing

§  Component spec’ing

§  Production line design and configuration

§  Promotion

§  Pricing

§  Dealer relations

§  Consumer marketing

§  Transportation

§  Listening / feedback loops

§  Financial incentive design and support

§  Maintenance relationship

§  CRM

§  Consumer feedback management

§  Corporate communications and responsiveness

§  J-I-T spec’ing / warehousing

§  Logistics

§  Sourcing

§  Quality assurance

Company Confidential September 28, 2015

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Product Stewardship Failure – Davison Product Events

§ Sodasorb recall (at the time part of Darex) § Resulting from paint chips in the product from the protective coating applied to

portions of the processing equipment

§ VTI Incident § Cylinder returned to Grace after use, which then leaked at our Lehnkering (3rd party)

warehouse in Germany

§ ModCol §  Spring-type chromatography column failure at a customer location

Excellent Product Stewardship can create a Competitive Advantage

Product Stewardship – Background

Company Toyota Apple BP Problem Sudden acceleration iPhone 4 reception issues Deepwater Horizon catastrophe

Resulting in Complaints, recalls, Congressional hearings,

loss of life

Unreliable signal strength readout, dropped calls, angry

(wired) fans

Death and destruction; the potential loss of the

Gulf States’ way of life

Complicated by Riveting 911 calls, 24/7 media Media hype, blogosphere, competitive market space

Politics, oiled wildlife

Corporate Response Slow: inability to identify the problem

and take responsibility

So-so: Denial, acceptance, action

Bad: No plan in place. Leadership

perceived as slippery as the spill

Causing Market Cap drop -19.5% ($31.5B) January to July

Market Cap drop -9% ($22B)

June 21 to July 15

Market cap drop -40% ($78.6B)

January to July

Real Problem Grew too fast; lost focus on quality.

The antenna didn’t work. Solution: rubber band (literally).

Didn’t have a plan in place in case of a catastrophe; engineering shortcuts

Short-term consequences Yes Yes Yes

Long-term consequences Possibly No Yes

Conclusion Brand events are often not within our control

Live the values you profess to in public

Be responsive to events